The summary of the survey results are as follows.
(1) Overseas business continues to struggle with lack of clarity.
During FY2019's survey, trade friction between the US and China, economic slowdown in China, trouble due to Brexit, and a strained situation in the Middle East, all contributed to the uncertainty in the global situation. Overseas production ratios reached 36.8%, the highest level since the survey began. However, the proactive stance toward overseas business is not necessarily uniform, adding cautiousness to prospects for the future. By region, the friction between the US and China caused a striking decrease in revenue satisfaction level in China, while, by contrast, trends in other countries and regions were generally steady.
(2) India takes the lead for prospective countries. China's drop to second place creates an opportunity for re-evaluation of Asian countries.
For the first time in 3 years, India was back to be ranked as the top country for potential business expansions. It cannot be denied that the impact of a large drop in voting rates in China caused the situation where India emerged in relative terms. However, there are clear signs that, overall business in India is about to shift into full swing, so this may not be a temporary change in rank. At the same time, there were also signs of the next prospective countries in Asian countries, particularly in Vietnam and Thailand but could also be seen in the Philippines and Myanmar. China's drop is, therefore, creating the opportunity for other Asian countries to be re-evaluated.
(3) As the impact of friction between the US and China increases, Japanese businesses attempt to find a path towards co-existence between both.
Approximately half of businesses responded that friction between the US and China was causing a decline in profits, an increase over the previous year. This confirms the impacts that this issue is creating across a broad range of industries, including automotive, chemicals, and electrical equipment & electronics. Effects on direct investment included a drastic decrease in investment in China, and a predicted increase in investment in the third countries. On the other hand, this survey also revealed that Japanese businesses are trying to co-exist with China and the US. Efforts include flexible changes to supply chains to mitigate effects of the US-China conflict, as well as measures such as introducing factory automation (FA) and strengthening company data management.
(4) Strong expectations for innovation through overseas expansion, with particular focus on Shanghai. When asked about open innovation, results showed an expected expansion in cooperation with overseas universities, businesses, and startups. Tokyo received overwhelming support and was ranked highest amongst cities where this cooperation could take place. More interest was seen in Shanghai compared to Silicon Valley, suggesting a qualitative change in Japanese companies' expectations towards China. It became also clear that expectations for each city are not uniform across industries and partners, reconfirming the necessity of choosing the most appropriate cities depending on different attributes of each company.
(5) In the future, the ability to search for new technologies with an appeal to propose solutions to issues, and organization power to support them will be tested overseas.
This year's survey clearly showed the stance of companies that diligently sought out solutions to disruptions, despite the effects caused by the political and economic situation. It was also confirmed that the respondent companies also had a deep interest in future-focused open innovation and a latent desire to expand overseas.
